National energy governance
The national energy market began operating in 1998. The Council of Australian Governments (COAG) then created a new governance structure, including three market bodies, to oversee the nation’s energy market:
- The AEMC and the Australian Energy Regulator (AER) were both created in 2005
The Australian Energy Market Operator (AEMO) was created in 2009 and it took responsibility for gas and electricity market operation roles. AEMO was preceded by NEMMCO, which was established in 1996 and operated the national energy market from 1998 - 2009.
The NEM governance structure was designed to deliver effective competition, to provide clear accountabilities and to support investment certainty in the energy sector by separating decisions on government policy, energy regulation and energy system operation.
Each market body is an independent decision-maker with clear powers, functions and accountabilities that support the efficient operation of the market in the long-term interests of consumers.
The governance framework is captured in an intergovernmental agreement that sets out the legislative and regulatory framework for Australia’s energy markets, provides for national legislation that is implemented in each participating state and territory and provides for three national energy market institutions (market bodies) under the overall umbrella of the Council of Australian Governments (COAG) Energy Council.
The Energy Security Board was created in 2017 to implement the recommendations from the Independent Review into the Future Security of the National Electricity Market (Finkel Review).
You can find more information about:
- how the NEM was created at The National Electricity Market: A case study in microeconomic reform.
- the history of the AEMC
National responsibilities in energy
COAG Energy Council
This council is chaired by the Commonwealth Energy Minister and its members include all state and territory energy ministers. The COAG Energy Council coordinates government energy policy.
Because energy policy is in the domain of the states and territories, consistent policy at the Commonwealth requires coordinated effort, for example, changes to the National Electricity Law require agreement among all the participating jurisdictions. The Australian Energy Market Agreement (AEMA) sets out how energy policy will be developed through the jurisdictions.
The Energy Council seeks to ensure the safe, prudent and competitive development of the nation's mineral and energy resources and markets to optimise long-term economic, social and environmental benefits to the community.
It does this by:
- facilitating national oversight and coordination of governance, policy development and program management to address the opportunities and challenges facing Australia’s energy and resources sectors
- providing national leadership on key strategic issues and effectively integrating these strategic priorities into Government decision-making in relation to the energy and resources sectors
- enhancing national consistency between regulatory frameworks to reduce costs and improve the operation of the energy and resources sector.
Australian Energy Market Commission
Please see the about us section for information about our role and responsibilities.
Australian Energy Regulator
The Australian Energy Regulator (AER) is the regulator of the wholesale electricity and gas markets in Australia. It forms part of the Australian Competition and Consumer Commission (ACCC) and enforces the rules established by the AEMC.
The Economic Regulatory Authority (ERA) is the equivalent body in Western Australia. The Utilities Commission is the equivalent in the Northern Territory, although the AER has taken on the economic regulatory functions of the Utilities Commission with respect to electricity.
The AER is responsible for regulation of the retail sale and supply of electricity and gas in those jurisdictions which have adopted the National Energy Retail Law (NERL).
While the Commonwealth has responsibility for the AER, its governance, functions, powers and duties are established under agreement of the Energy Council and described in the National Energy Laws.
Its functions include:
- setting maximum prices that energy network owners can charge, or the maximum amount of revenue that they can earn
- regulating the revenues of the natural monopoly businesses (eg transmission and distribution electricity networks and covered gas pipelines)
- monitoring of the wholesale electricity market
- monitoring and enforcing compliance with rules and legislation
- publishing information on energy markets
The AER also regulates energy retail markets in some jurisdictions, where its role includes:
- authorising retailers to sell energy
- approving retailers’ policies for dealing with customers in hardship
- administering a national retailer of last resort scheme
- managing the energy price comparison website - Energy Made Easy
Australian Energy Market Operator
The Australian Energy Market Operator (AEMO) is responsible for the day-to-day management of wholesale and retail energy market operations, including the:
- National Electricity Market
- Victorian Declared Wholesale Gas Market
- Short Term Trading Market
- Gas Supply Hubs
- retail markets that facilitate retail competition, allowing customers to purchase energy from a supplier of their choice
Its responsibilities include:
- market operation and administration of the procedures for the energy markets
- operation of the electricity power system, which is largely integrated with its role as market operator of the NEM.
- coordination of the the strategic development of the national electricity grid. In gas, it delivers strategic planning advice and forecasting to guide long-term investment and resource management.
- maintaining and improving power system security
- registering persons as market participants (and providing exemptions)
- providing information to the market through its various electricity reports and the gas bulletin board.
AEMO is a public company limited by guarantee and has two types of members: government and industry, constituting 60 and 40 per cent respectively. It has statutory functions under the National Energy Laws. Its corporate activities are governed by its Constitution and the Corporations Act 2001 (Cth).
The Reliability Panel
Please see the Reliability Panel page for information about its role and responsibilities
Energy Security Board
The Energy Security Board is comprised of an Independent Chair, Independent Deputy Chair and the most senior leaders of the AEMC, AER and AEMO.
It's responsible for the implementation of recommendations from the Independent Review into the Future Security of the National Electricity Market (Finkel Review).